Biggest Winners and Losers From American-US Airways Merger

PHOTO: An American Airlines jet taxis on the runway at Laguardia Airport, Aug. 14, 2013, in New York.Bruce Bennett/Getty Images
An American Airlines jet taxis on the runway at Laguardia Airport, Aug. 14, 2013, in New York.

With the Justice Department's approval of the American Airlines-US Airways settlement to form the world's largest airline, there will be less competition in the industry, but that doesn't mean all fliers will lose with higher fares.

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The combined airline, which will use American's name, will have more than 6,700 daily flights to 336 destinations in 56 countries.

Here's a list of the probable winners and losers emerging after the settlement that included a number of concessions from the two airlines after the Justice Department sued in August to halt the merger.

The Losers

1. Consumers, in the long run

With fewer airlines, consumers will likely pay higher ticket prices in the future, says Rick Seaney, CEO of FareCompare.

In the past decade, the airline industry shrank from eight large airlines to four.

"With the latest merger, it drops to three. It is likely we'll be sitting around in 2020 saying I wish we still had eight carriers," Seaney says.

The public probably won't ever know for certain how this merger affects the price of their ticket, says Seaney. But he believes the main driver of airline fares will be the economy and fuel prices, not necessarily competition.

Read More: What an American-US Airways Merger Means for You

2. Loyal customers whose loyalty is virtually assured to one airline after four mega mergers

They will have few choices when it comes to which airline they want to be loyal to, in terms of miles programs, Seaney says.

3. Smaller regional cities

To reach a settlement, US Airways and American Airlines agreed to concessions, including giving up 104 takeoff and landing slots at Reagan National Airport in Washington, D.C. The combined company is also giving up slots at New York's LaGuardia Airport and gates at Boston Logan International Airport. Concessions were made at Miami International, Chicago O'Hare, and Los Angeles International.

"What I find puzzling is US Airways was a low-cost airline in these airports, so swapping for Jetblue or Southwest is like swapping out fraternal twins. US Airways was competing heavily for American customers. I don't think it's a huge win for consumers. I don't think you'll see overall prices that are different from Jetblue and Southwest," Seaney said.

Still, Seaney says the slots the merged airline gave up are under 2 percent of their route network.

"That's the equivalent of the revenue from two big corporate clients," Seaney says. "By the way, now that they're a bigger airline with a broader network, can probably win back two corporate clients they lost in the past."

The Winners

1. American and US Airways employees

"This gives closure to tens of thousands of employees who have been in limbo for almost two years, and some cities," Seaney said. "Now they know where they are going."

2. Slot-divested cities on limited routes

Travelers can look for more competition on certain routes and cheaper introductory pricing, Seaney says. Leisure travelers may benefit briefly from newly competitive routes. Not much will change for business travelers who pay premiums for convenience and last-minute purchases.

3. Other airlines

"Other carriers, including low-cost airlines, can gobble up the now-freed slots and have more to offer customers," Seaney says.

The biggest airlines winners include JetBlue and Southwest and potentially Spirit and Virgin America, because it isn't clear whether other large, legacy airlines will be allowed to bid on the slots from the merged company's concessions.

4. The airline industry overall

"On the positive side of this, finally airlines are going to have some profits and are going to invest in their products," Seaney says.

"Who wants to fly in a 15- or 20-year old aircraft? Everyone wants a new car," he says. "Now they'll have a lot of new cars in their fleets."